Bombs, Missiles And War – What To Expect From The Stock Market Next

Friday night opened up a whole new perspective on the global markets with the coordinated targeted attack on Syria. It’s not that we didn’t know this was a possibility, yet the event itself changes how the markets may react on Monday and throughout this next week.

First off, with this event playing out late Friday night and early into Saturday, there are a number of things we have to consider. The US Dollar may be under some pressure this week as a result of this event.Gold and Silver may rally as fear and panic enter the markets. Oil will likely rise on fear of a disruption or conflict related supply issue. The US stock market will likely rotate with a bit with continued large price volatility early Monday morning as traders attempt to reposition after this event. Given all of this, the long-term perspective has to be maintained in order to understand the true market dynamics.

As we understand it, this event was a “shot over the bow”, so to say, with regards to the players in Syria and the fact that chemical weapons attacks will not be allowed to continue. Syria is an absolute mess with multiple parties attempting to develop alliances and dominate the narrative of this conflict. The US involvement started quite a while ago and we believe the US will attempt to stay as far away from direct engagement as possible with regards to this ongoing event

As traders, we have to understand that this type of isolated event may create price anomalies in the markets that present incredible opportunities for smart investors. Our ADL price modeling system is still warning us that the US markets should be headed higher over the next 3~5 weeks. How does this event in Syria change these predictions? It doesn’t. It just means that pricing pressure because of this event may create what we call a “price anomaly” that allows us to position our trades for the “recovery event.

This SPY chart illustrates what we believe will be the most likely outcome.If investors panic and rush into the US markets, then we could see a broad market rally early this next week. If investors panic and attempt to rush into a protectionist position, then we could see the US majors consolidate near these lower price ranges for a few weeks setting up the “price anomaly” we have been discussing. Either way, we believe the markets will attempt a massive upside move in the near future because our advanced price modeling systems are showing a clear upside bias as well as the fact that capital will always move into safe and stable environment for returns. The US and other established markets are really the only places where capital will attempt to reside if this conflict extends much further.